Trade Spending is the ‘Pink Elephant’ on Your P&L –
Time to talk about trade spending – a major expense in your P&L. You are a team of professionals, who manage a small business with tenacity and care. You can account for your Cost of Goods, your HR expenses, G&A and others down through the line item level. In some cases, you can even account to fractions of a penny – yes every dollar matters!
Knowing these is critical to managing your business. Furthermore, you also analyze these, make decisions where to invest more, cut back some, or spend the same to get a better bang for the dollar.
In fact, not only does your internal management teams drill into these numbers regularly, but your investors have a keen interest what the returns are as well. We all know the drill at a small or emerging company.
THE BIG QUESTION IS: Can you account the same for your trade promotion spending in your P&L?
Undoubtedly, this area confuses and challenges many Natural-Specialty-Organic manufacturers. They don’t analyze it, and many simply ‘sweep’ all of the distributor deductions into broad categories to clear the short-pays too! Every trade promotion expense has (or should have) a contractual agreement with a distributor or retailer.
Similarly to every other line item on your P&L, your finance team should be able to account for every dollar deducted by a distributor or retailer. You should have the same level of scrutiny & granularity as any other GL area.
In sum, maybe it’s time to address the ‘pink elephant’ on your P&L, a.k.a. trade spending – and have your team make better and more effective decisions with these significant dollars. Our other client partners do!
We can be assisting within weeks with practices, processes and systems. It will save you time and it’s extremely affordable.